Why more first-time homebuyers are choosing FHA loans
Quarter | FHA | VA Guaranteed | Cash | Conventional |
---|---|---|---|---|
2019-Q4 | 18.42% | 5.92% | 4.61% | 71.05% |
2019-Q3 | 15.48% | 7.73% | 7.14% | 69.64% |
2019-Q2 | 18.82% | 8.06% | 5.91% | 67.20% |
2019-Q1 | 17.24% | 8.62% | 5.17% | 68.97% |
2018-Q4 | 12.80% | 6.40% | 5.60% | 75.20% |
2018-Q3 | 13.79% | 4.83% | 6.90% | 74.48% |
2018-Q2 | 10.67% | 6.74% | 7.30% | 75.28% |
2018-Q1 | 11.90% | 8.93% | 5.36% | 73.81% |
2017-Q4 | 12.50% | 8.33% | 6.94% | 72.22% |
2017-Q3 | 14.79% | 7.04% | 4.93% | 73.24% |
2017-Q2 | 13.53% | 8.82% | 6.47% | 71.18% |
2017-Q1 | 14.10% | 8.97% | 4.49% | 72.44% |
2016-Q4 | 14.40% | 8.80% | 5.60% | 71.20% |
2016-Q3 | 13.79% | 8.28% | 4.83% | 73.10% |
2016-Q2 | 17.09% | 9.49% | 5.06% | 68.35% |
2016-Q1 | 17.16% | 8.21% | 5.22% | 69.40% |
From 2016 through the start of 2018, there was a slow decline in the use of FHA-guaranteed loans on new home sales, from 17.1% down to 11.9%. But more recently, between the second quarters of 2018 and 2019, data showed a steep rise in these new home loans, from 10.7% to 18.8%.Footnote1 Based on actual sales figures, that's an increase of 84%Footnote1 over this time period! What's going on here?
1 U.S. Department of Housing and Urban Development, New Residential Construction
2 Federal Housing Administration (FHA) Loan, Investopedia, Troy Segal, September 24, 2019
3 FHA mortgage insurance protects the lender (not the borrower) if a borrower defaults on the FHA loan. Each FHA borrower pays a Mortgage Insurance Premium. The premiums are collected and used by the FHA to reimburse the lender (not the borrower) should the borrower default and the lender must foreclose upon the loan/sustain a loss. This insurance enables a lender to provide loan options and benefits often not available through conventional financing.
Monthly Mortgage Insurance Premiums (MIP) and Upfront Mortgage Insurance Premiums (UFMIP) apply. Maximum loan amounts vary by county.
4 First-time homebuyers could snag lower costs for FHA loans under House-passed bill, CNBC, Sarah O'Brien, July 18, 2019
5 FHA loan limits to increase in most of U.S. in 2019, HousingWire (HW Media, LLC), Kelsey Ramirez, December 14, 2018
6 FHA to make financing easier for condo owners, HousingWire (HW Media, LLC), Jessica Guerin, August 14, 2019